YOU GOT PUNK’D, BAREFOOT! Hoovering up Zuck bucks
Did you hear the rumour that Facebook is considering launching its own Bitcoin-inspired cryptocurrency?
You didn’t? Maybe that’s because you get your news from Facebook, and it just didn’t show up in your feed.
So is it possible? Could a social media platform really transform how we pay for things? Well, think of it like this: in China (where Facebook is banned), every store has a WeChat payment option. What’s WeChat? It’s the Chinese version of Facebook, Instagram, Twitter, YouTube, Google. All rolled into one “super app”. However, WeChat’s big dumpling is mobile payments.
In China you can order a meal in a restaurant, split the bill with your mates, pay your share, and take a photo of your dish to impress your friends — all on WeChat. The platform has over one billion users a day and accounts for 3 per cent of mobile traffic in China. By contrast, Facebook accounts for 14 per cent of mobile traffic in the US.
Currently, Facebook’s founder, CEO and resident robot Mark Zuckerberg controls what 2.2 billion people view on their screens every day (with little oversight or regulation), and he knows more about you than your mother does.
But it’s not enough. It’s never enough. Just think of all the extra data he could hoover up from tracking our payments, like WeChat does. Zuck bucks! Still, he’s keeping his crypto close to his chest.
Zuckerberg says creating an online currency is not really on his radar. True dinks.
In fact, he only has what he calls a “small team” on it. Uh-huh.
So who’s leading this small team? A bloke by the name of David Marcus, who was last seen running a tiny little app for Facebook called Messenger. And what was he doing before that? He was the chief of some tiny little company called PayPal!
Tread Your Own Path! Hi Scott,
I thought you made some good points last week on trying to end the superannuation gravy train. However, the Productivity Commission dismissed your idea last week when it “rejected a feebased auction because of the risk funds would pursue low-cost strategies at the expense of net return”. What say you?
Ken Hi Ken, Yes, I saw that. The Productivity Commission released its findings into the super industry last week and, unsurprisingly, they’ve reported that the industry is not very productive.
Correction: they found it’s been super-duper productive for the finance industry, which creams off $32 billion a year from our balances (and their take rises every single year), but for the average worker? Not so much.
The first thing their report pointed out, and rightly so, is that there are too many funds, and too many duds among them. Here’s why this is a problem: if the average 21-year-old gets put into a dud fund (one of the many “underperformers”) they’ll have $635,000 (or 53 per cent) less come their retirement. That’s the difference between spending your retirement sipping sangria in Spain or sculling a stubbie in Shepparton.
As you said Ken, the Productivity Commission dismissed my idea for a cheapest-fee-wins tender. Instead, they’ve recommended that an independent panel choose 10 funds that are “best in show” each year and have people defaulted into one of those at the start of their careers. This one has me scratching my head.
Question: How can anyone choose the best-performing fund ahead of time? Answer: They can’t. Remember the old saying “past performance is no guarantee of future results”? It’s actually true!
The Standard & Poor’s long-term SPIVA research on fund managers has proven that the only correlation with performance is that the bestperforming funds are more likely to become the worst-performing funds over time!
Another question: What happens if you’ve invested in a best-in-show fund that gets punted from the top 10 list? Answer: Who the hell knows? So, what can you control to help you retire with dignity in a sea of sharks? Two things: 1. Fees. 2. The percentage of your assets you’re willing to invest in the share market. And unfortunately there is no one-size-fits-all solution for the asset mix — it’s based on your backbone. And that’s why I personally think the Productivity Commission should focus on the only thing anyone can control, and the government can legislate on:
WHY AM I PAYING A UNION?
I was horrified to see in The Sunday Telegraph an article by Miranda Devine on just how much of our industry super fund money is donated to unions, including by Hostplus! They have given $7.5 million to the United Voice union since 2006. (It’s not just Hostplus either — Vision Super have given $300,000; AustralianSuper $4.8 million and Sunsuper $357,000 over the same period.)
Have to admit I was shocked — that is my money they are giving away to a political party. How does that benefit the fund? How does it benefit my returns? What might the costs of administering the fund reduce to if they were not giving money to a union? Would love to hear your thoughts.
Wendy Hi Wendy,
Here’s how the game is played: Industry funds are controlled by unions and employee associations. They have union delegates on their boards, and in most cases their director fees are paid back to the union body, United Voice. The employee associations also have sponsorship agreements with the fund. It’s all audited and disclosed to APRA. However, I totally agree with you — it’s vitally important to make sure it’s genuinely for services rendered (which they claim), rather your money being used as a slush fund for a political party.
On the other hand, most retail funds are owned by the banks or AMP, and they charge (on average) double the fees of industry funds in order to pay a profit back to their shareholders. This is one reason industry funds consistently outperform retail funds: the less they take, the more you make.
Ultimately, the Productivity Commission’s findings show that most super funds are putting their own interest in front of their members’ interest. And there’s the rub: I can’t control how any super fund spends their money, the only thing I can control is the fees I pay, which is why I have my money in Australia’s lowest-cost super fund.
However, if you don’t like how the sausage is made, don’t eat it. Vote with your feet and move to another fund!
‘ WHERE ARE THEY NOW?’
One year ago I wrote to you — on the day I found out I was pregnant. I told you how, after 10 years of being together, I got married to my partner and then discovered he had been lying to me all those years and had run up huge debts from online spending. You suggested he might get some help from Beyond Blue and that we talk about money together at a monthly Barefoot Date Night.
Well, a year on here’s my update. I have had a little girl, and my husband has completely turned his life around — I am so proud of him. Telling him that you had called me really resonated with him, as he respects you a lot; it started the turnaround. He then admitted he had a problem (after he tried to put it back on me and I wouldn’t have a bar of it) and has not gone back on that.
The calmness in the house is amazing, and we have been working together as a team over the past few months. Thank you for your support — it has meant so much to our little family. You’re a legend!
Kim Hi Kim,
Well done, you (and your hubby) have got this! Good luck for your first year with the baby. I’m on my third now and it doesn’t get any easier (so my wife tells me).
THE BAREFOOT INVESTOR HOLDS AN AUSTRALIAN FINANCIAL SERVICES LICENCE ( 302081). THIS IS GENERAL ADVICE ONLY. IT SHOULD NOT REPLACE INDIVIDUAL, INDEPENDENT, PERSONAL FINANCIAL ADVICE.
Facebook's CEO Mark Zuckerberg.
The Barefoot Investor: The Only Money Guide You’ll Ever Need (Wiley) RRP $29.95